If we speak about Electronic Money the main word here is the Money. It means that this innovation, first of all, deals with finance and economy and secondly – it is of legal nature.

You cannot take this money into your hands, count with your fingers or sense its. However, it is real. Electronic money functions also prove its full value. It is the measure of value, payment means, means of circulation and (to a lower extent) means of hoarding. It meets all requirements stipulated for the world finance. That is why, electronic money are used as international payment unit.

Economic Nature of Electronic Money

Virtual money is information stored electronically. Electronic account’s holder is an owner of a payment instrument providing a number of opportunities.

Electronic money stored electronically has, on one hand, the properties of traditional cash money, on the other – the properties of bank payment instruments. So its holder can make financial settlements as in cash circulation (bank system is not involved), or he/she can make non cash payments using accounts opened in credit organizations. This is the commodity and credit nature of electronic money.

Legal Nature of Electronic Money

The basic feature of electronic money from legal point of view is its emission. The number of electronic money shall be guaranteed with cash.

Legislation and civil law of some countries have not yet establish some rules regulating the emission. Thereby, virtual money is still considered electronic monetary obligation of the issuer. The issuer is, mainly, the banks. As banks are not very trusted sometimes so the electronic money use is thus far limited. Government, for its part, issues cash and is very trusted by population and businessmen.

Electronic Money Definition

There is no some generally recognized definition yet. The nature and the potential of electronic money compared with the traditional are still disputed. However, based on the described functions, properties and capabilities we can name three aspects to be included into the definition.

First of all, this money (information) shall be stored electronically. Secondly, it is emitted once money is withdrawn from the account. Thirdly, electronic money is of real-value to its issuer as well as other entities using different payment means. These three aspects most fully explain the economic and legal components of electronic money.

Electronic Money Future

Considering all advantages and disadvantages of electronic money one can imagine its further development and role in financial market. Compared to cash, electronic money:

- have lesser transaction cost. When transferring money from one purse to another the charge is of about 1% and the transaction cost does not depend on the amount;
- Mostly its use is anonymous. Unlike bank accounts, electronic money transactions do not involve any personal contacts with banks and do not involve any filling of documents;
- Has lower requirements to safety;
- Provides its holder with a possibility to make on-line payments.

The greatest disadvantage of electronic money is its impossibility to be easy-to-use means of hoarding. Its issuer gives no guarantee of the virtual money paying capacity. It is not recommended to save electronic money for a long time and use it to pay for big financial transactions.
But it is not so relevant compared with the risk of cash stealing and inflation; and that is why the number of electronic money is increasing.

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